We believe that recent market dip has come to an end. We will see continued market rebound in the next two weeks. During the last 12 months, market had 4 dips and all recovered nicely. Our current dip is the fifth one within a year and should recover nicely as well.

Let us use S&P 500 as an example to take a closer look at how each dip developed and recovered:

Dip 1

2013

dip

recover

date of development

Aug 05 -> Aug 27

Aug 28 -> Sep 18

duration (days)

17

15

index changes

1710 -> 1630

1630 -> 1735

point of changes

-80

+105

Dip 2

2013

dip

recover

date of development

Sep 19 -> Oct 09

Oct 10 -> Oct 29

duration (days)

15

14

index changes

1735 -> 1650

1650 -> 1770

point of changes

-85

+120

Dip 3

2014

dip

recover

date of development

Jan 16 -> Feb 03

Feb 04 -> Feb 19

duration (days)

12

11

index changes

1850 -> 1740

1740 -> 1845

point of changes

-110

+105

Dip 4

2014

dip

recover

date of development

Apr 03 -> Apr 11

Apr 14 -> Apr 22

duration (days)

7

6

index changes

1895 -> 1815

1815 -> 1885

point of changes

-80

+70

Dip 5 - current, still in development

2014

dip

recover

date of development

Jul 24 -> Aug 07

Aug 08 -> ?

duration (days)

11

?

index changes

1990 -> 1905

1905 -> ?

point of changes

-85

?

In fact, S&P 500 fell to as low as 1,891 during overnight trading last Friday to make it a 100 point drop before rebounded.

Observations: It took about the same number of days to recover after each dip. During each drop, S&P 500 was down about 80-100 points and all the point loses were recovered after the recovery. If history repeats one more time, it may take about 10 days for the market to recover and the S&P 500 should go back to 1,990 level again.